On Wednesday, the Biden administration announced the approval of cancelling over $6.1 billion in student loan debt held by 317,000 borrowers who had attended The Art Institutes, a now-defunct network of for-profit colleges.
The Department of Education found that these schools had misled prospective students about job placement rates and average salaries of graduates. This relief is granted under an existing federal student loan program called borrower defense to repayment, which offers debt relief to students defrauded by their colleges.
President Joe Biden (Credits: ABC17NEWS)
President Biden has emphasized the administration’s efforts to make it easier for borrowers to qualify for federal student debt relief since taking office. Nearly $160 billion in student loan debt for almost 4.6 million borrowers has been cancelled under Biden’s administration, which accounts for 10% of all outstanding federal student loan debt.
The announcement on Wednesday represents one of the largest group discharges under the borrower defense program. This action follows investigations by attorney general offices in Iowa, Massachusetts, and Pennsylvania into The Art Institutes and its parent company, Education Management Corporation (EDMC).
Eligible borrowers, who were enrolled at any Art Institute campus between January 1, 2004, and October 16, 2017, will have their federal student loan debt wiped away automatically. The Department of Education will pause impacted loans, relieving borrowers from making payments during the processing of the discharge. The debt will also be removed from borrowers’ credit reports.
Despite the Supreme Court’s rejection of Biden’s signature student loan forgiveness program last year, the administration has continued to provide debt relief through existing programs targeting specific groups of borrowers.
US President Biden (Credits: WFXR)
These include public-sector workers, those defrauded by their colleges, and permanently disabled borrowers. The administration has also introduced a new student loan repayment plan known as SAVE, offering generous terms for low-income borrowers and cancelling outstanding debt after at least 10 years of payments.
The Department of Education is also rectifying administrative errors in past payments to bring some borrowers closer to debt relief. Additionally, the administration is working on new proposals to provide relief to certain groups of borrowers, including wiping away accumulated interest for those with larger loan balances. These proposals are expected to take effect as early as this fall.
